HP Walks the Tightrope with New Supply Chain Strategy Amid DRAM Shortage

One of the world’s largest computer manufacturers, HP, is exploring the possibility of including Chinese memory manufacturer CXMT (ChangXin Memory Technologies) in its supply chain. This move stems from the acute shortage of DRAM in the global market, as highlighted in a Bank of America report referenced by analyst Tae Kim.

Unlike giants Samsung and SK Hynix, CXMT is not yet involved in the HBM race and has sufficient free capacity for producing standard DDR5 modules. By 2026, the company plans to expand its capabilities to 300,000 silicon wafers per month and to raise $4.2 billion through an IPO for expansion. This expansion is vital in capitalizing on the increasing global demand for memory, driven by advancements in AI and high-performance computing.

The main obstacle is the firm U.S. stance. The NDAA law already prohibits the Pentagon from purchasing equipment with chips from CXMT. Although there is currently no direct ban for commercial devices, collaboration between American HP and the Chinese supplier could trigger the introduction of new sanctions. To minimize risks, HP plans to use CXMT memory only in computers and laptops intended for sale in Asia and Europe.

Impact on Business Operations

HP’s strategic move to diversify its supply chain with CXMT may give it a competitive edge in the Asian and European markets. The decision could lead to cost savings and ensure a stable supply of DRAM despite global shortages. However, concerns over potential U.S. sanctions remain a critical consideration.

Earlier in South Korea, ten former Samsung employees were arrested for leaking 10-nanometer class memory production technology to China, specifically to CXMT. Such incidents highlight the ongoing tensions in the tech sector, with intellectual property and technology transfer under intense scrutiny.

In the competitive memory industry, where technological leadership and manufacturing capacity are paramount, CXMT’s plans to ramp up production signify a strategic counter to the dominance of established players. If successful, this could catalyze further industry shifts and collaborative ventures.